The Fred Meyer you are thinking of may be the Shoreline Store. I think that store has decent traffic and likely hits $1 million a week which for a store of that size isn't really great and they could cut the thing in half and probably not even lose $100k of the volume. That is a strange Fred Meyer because it is very long and not very deep. The garden center is a fairly typical size.
Further south in Seattle itself there is one of the newest Fred Meyer units and it takes up an entire city block, has a basement/underground and surface level parking and also has a very large garden center. This site previously had a Thriftway and a general merchandise only Fred Meyer and it took many years for the redevelopment to occur to get a full size Fred Meyer onto the parcel.
I caution the idea of heavily cutting stores off for the value of their real estate. It is one thing to do it with a few stores but usually when executives see how much short term gain they can get from doing that, it ends up being a lot more than a few stores. Fortunately nobody has had the bright idea to mess up Fred Meyer by doing that, yet.
Another issue is that I don't think Kroger owns as many of the Fred Meyer sites as some think. I admit I can't find a list but back in the 90s, they sold many of their stores when they needed to raise cash. If someone has a list, please post it but I just don't think the Fred Meyer division has as much owned real estate as they think.
But I will agree that many of these sites are prime redevelopment opportunities. But I just don't that's what is behind this merger.
I know for a fact that the Coos Bay store is one that Kroger owns through Ralph’s.
Smith’s owns all of their locations in Northern Nevada, either as Smith’s, or through Dillon’s. Another interesting aside is that the Safeway off Steamboat Parkway is technically owned as Vons.
I am going to disagree about Fred Meyer not owning the real estate. They have sold a few individual stores, but I would expect those to all be suburban or more rural locations. Reason is quite simple: the metro market locations would warrant rents that they couldn't afford. They're massive properties. Furthermore the only buyers of such locations would only make such a purchase on the condition that Fred Meyer turns in the keys upon close. Nobody's going to lease a site in Seattle or the surroundings to Fred Meyer. The going rate for rent in Seattle puts a massive Fred Meyer plus other expenses like CAM, property tax etc so closer to $10 Million a year in rent AT THE LOW END and potentially much more. No way in hell a Fred Meyer could turn a profit paying nearly a million a month in rent... In a crazy area like Bellevue the rents are double Seattle... So a Fred Meyer rented there with say 150K sq ft would pay closer to $20 Million dollars a year. Generally you want annual rent to be less than 10% for a store to be profitable. For a lease back Fred Meyer in Seattle or Bellevue you would need the store to be doing at least the same volume as a top volume Costco (nearly $1 Million a day on weekends, and at least $500K per day on weekdays) to work on such rents. We know no Fred Meyer is delivering that kind of sales revenue. Thus I must conclude that they did not sell these stores otherwise they would NOT be open in Seattle, Portland, etc.
Let me be crystal clear: the sites that supermarket chains have sold for lease backs are all rural, or in suburbs where there is still a lot of land. They sell because it's an easy cash out and they sell when there's an option to build a new store down the street or around the corner in case things go bad with the new landlord. Sometimes they intend to move or close and sell anyway.
As we have seen a tiny Safeway in San Francisco is closing and sold for over $30 million. To stay the rent is usually a 7-stack, so basically the purchase price divided by 7 is the new annual rent plus charges for CAM, tax etc. Do you think that little Safeway was going to survive if it had to pay $4.2 Million a year in rent? Of course not, they sold it and knew they were kissing it goodbye.
A rep from this union says: “You can’t assume things will stay the same by opposing the merger, Cerberus intends to sell Albertsons stores to someone. If it’s not going to be Kroger, it’s going to be sold to someone else.”
Won’t Apollo be taking Albertsons off the hands of the three-headed dog assuming the merger is ground to a halt?
If Albertsons is selling stores, it will be their weak Denver, Texas, East Coast assets. Nothing in the West Coast, Intermountain, Southwest, Chicago regions is going away assuming the merger is stopped.
Another rep from this union said, “Workers in the sold-off stores would be better off under C&S than other potential buyers. We were pleased to find not only that they understood and liked the grocery business, but also recognized the importance of quality employees to their ongoing success.”
C&S is a wholesaler, not a retailer. At best, C&S will be a repeat of the Fleming Corporate Retail disaster (Fleming operated retail for maybe 10 years until they started offloading Rainbow, Baker’s, ABCO, etc. onto other buyers before collapsing inevitably). I still think C&S is just buying 413 stores to flip for real estate. That’s exactly what Comvest did with the Haggen trainwreck.
Ahold would ultimately be a better buyer for all of the divests. Give them the entire Albertsons nameplate, along with QFC, Carrs, Mariano’s, and some leftover Safeway, Vons, Tom Thumb, etc. stores.
This will likely be the sole union endorsing the merger.
I guess we will have to see what current comments from other UFCW Locals regarding the merger are. I cannot believe this endorsement.
Ahold had a chance and passed on Albertsons. There will be no Ahold merging with Albertsons. Especially in the current Interest Rate environment/difficult business climate for full price grocers.
I am going to disagree about Fred Meyer not owning the real estate. They have sold a few individual stores, but I would expect those to all be suburban or more rural locations. Reason is quite simple: the metro market locations would warrant rents that they couldn't afford. They're massive properties. Furthermore the only buyers of such locations would only make such a purchase on the condition that Fred Meyer turns in the keys upon close. Nobody's going to lease a site in Seattle or the surroundings to Fred Meyer. The going rate for rent in Seattle puts a massive Fred Meyer plus other expenses like CAM, property tax etc so closer to $10 Million a year in rent AT THE LOW END and potentially much more. No way in hell a Fred Meyer could turn a profit paying nearly a million a month in rent... In a crazy area like Bellevue the rents are double Seattle... So a Fred Meyer rented there with say 150K sq ft would pay closer to $20 Million dollars a year. Generally you want annual rent to be less than 10% for a store to be profitable. For a lease back Fred Meyer in Seattle or Bellevue you would need the store to be doing at least the same volume as a top volume Costco (nearly $1 Million a day on weekends, and at least $500K per day on weekdays) to work on such rents. We know no Fred Meyer is delivering that kind of sales revenue. Thus I must conclude that they did not sell these stores otherwise they would NOT be open in Seattle, Portland, etc.
Let me be crystal clear: the sites that supermarket chains have sold for lease backs are all rural, or in suburbs where there is still a lot of land. They sell because it's an easy cash out and they sell when there's an option to build a new store down the street or around the corner in case things go bad with the new landlord. Sometimes they intend to move or close and sell anyway.
As we have seen a tiny Safeway in San Francisco is closing and sold for over $30 million. To stay the rent is usually a 7-stack, so basically the purchase price divided by 7 is the new annual rent plus charges for CAM, tax etc. Do you think that little Safeway was going to survive if it had to pay $4.2 Million a year in rent? Of course not, they sold it and knew they were kissing it goodbye.
Fred Meyer went through some things back in the 90's. Could it be that they did real estate sales in the mid 90's and are working on 30-50 year leases that are at very low rates? I don't know anything specific, but I know broadly what babs is talking about when Fred Meyer went through some things back in the 90's and it was not great for them. I thought most of the properties were owned but maybe not. I've been meaning to dig up some old financial reports for Fred Meyer before they merged in Smiths (a real estate heavy company)/Ralphs (we know this has some very good real estate)/QFC (doubt that thing owned much real estate) but haven't.
A rep from this union says: “You can’t assume things will stay the same by opposing the merger, Cerberus intends to sell Albertsons stores to someone. If it’s not going to be Kroger, it’s going to be sold to someone else.”
Won’t Apollo be taking Albertsons off the hands of the three-headed dog assuming the merger is ground to a halt?
If Albertsons is selling stores, it will be their weak Denver, Texas, East Coast assets. Nothing in the West Coast, Intermountain, Southwest, Chicago regions is going away assuming the merger is stopped.
Another rep from this union said, “Workers in the sold-off stores would be better off under C&S than other potential buyers. We were pleased to find not only that they understood and liked the grocery business, but also recognized the importance of quality employees to their ongoing success.”
C&S is a wholesaler, not a retailer. At best, C&S will be a repeat of the Fleming Corporate Retail disaster (Fleming operated retail for maybe 10 years until they started offloading Rainbow, Baker’s, ABCO, etc. onto other buyers before collapsing inevitably). I still think C&S is just buying 413 stores to flip for real estate. That’s exactly what Comvest did with the Haggen trainwreck.
Ahold would ultimately be a better buyer for all of the divests. Give them the entire Albertsons nameplate, along with QFC, Carrs, Mariano’s, and some leftover Safeway, Vons, Tom Thumb, etc. stores.
This will likely be the sole union endorsing the merger.
This Union was bought off . Their words says it all.
What a corrupt betrayal. Their members should take them to court!
A rep from this union says: “You can’t assume things will stay the same by opposing the merger, Cerberus intends to sell Albertsons stores to someone. If it’s not going to be Kroger, it’s going to be sold to someone else.”
Won’t Apollo be taking Albertsons off the hands of the three-headed dog assuming the merger is ground to a halt?
If Albertsons is selling stores, it will be their weak Denver, Texas, East Coast assets. Nothing in the West Coast, Intermountain, Southwest, Chicago regions is going away assuming the merger is stopped.
Another rep from this union said, “Workers in the sold-off stores would be better off under C&S than other potential buyers. We were pleased to find not only that they understood and liked the grocery business, but also recognized the importance of quality employees to their ongoing success.”
C&S is a wholesaler, not a retailer. At best, C&S will be a repeat of the Fleming Corporate Retail disaster (Fleming operated retail for maybe 10 years until they started offloading Rainbow, Baker’s, ABCO, etc. onto other buyers before collapsing inevitably). I still think C&S is just buying 413 stores to flip for real estate. That’s exactly what Comvest did with the Haggen trainwreck.
Ahold would ultimately be a better buyer for all of the divests. Give them the entire Albertsons nameplate, along with QFC, Carrs, Mariano’s, and some leftover Safeway, Vons, Tom Thumb, etc. stores.
This will likely be the sole union endorsing the merger.
This Union was bought off . Their words says it all.
What a corrupt betrayal. Their members should take them to court!
The only legitimate concern here is that if Apollo buys Albertsons after the Kroger deal fails, that will be the worst possible outcome for their workers. Union or not they will quickly plow through the company and systematically gut the higher compensated workers, slash the benefits etc. And they won't do it directly by wielding the knife, they'll force the company to do it themselves by injecting so much debt into the organization that they have no choice but to make the cuts. The union will have to accept whatever meager handout is presented as benefits are reduced, wages stagnate, and positions are eliminated or replaced with automation. They do not want to see Albertsons go to a modern Private Equity firm... If the union has to choose between Kroger or Apollo, unfortunately I agree the better outcome is actually Kroger.
What the union should really do is fight for Albertsons to remain independent, although that may be difficult since Apollo already has their teeth into the company's neck. The other investors will all get offers to sell their shares to Apollo and they will accept that to cash out if Kroger fails to acquire the company. Apollo is the biggest threat to the union workers. I doubt they're not forming such a "plan B" in the increasingly likely event the merger agreement is terminated. Buying the entire company is pennies to their funds with billions of dollars, actually might be trillions in total...
Unless interest rates decline I do not see Ahold Delhaize getting involved. Fact is they had a chance and didn't buy. Maybe they saw something they didn't like?
I am going to disagree about Fred Meyer not owning the real estate. They have sold a few individual stores, but I would expect those to all be suburban or more rural locations. Reason is quite simple: the metro market locations would warrant rents that they couldn't afford. They're massive properties. Furthermore the only buyers of such locations would only make such a purchase on the condition that Fred Meyer turns in the keys upon close. Nobody's going to lease a site in Seattle or the surroundings to Fred Meyer. The going rate for rent in Seattle puts a massive Fred Meyer plus other expenses like CAM, property tax etc so closer to $10 Million a year in rent AT THE LOW END and potentially much more. No way in hell a Fred Meyer could turn a profit paying nearly a million a month in rent... In a crazy area like Bellevue the rents are double Seattle... So a Fred Meyer rented there with say 150K sq ft would pay closer to $20 Million dollars a year. Generally you want annual rent to be less than 10% for a store to be profitable. For a lease back Fred Meyer in Seattle or Bellevue you would need the store to be doing at least the same volume as a top volume Costco (nearly $1 Million a day on weekends, and at least $500K per day on weekdays) to work on such rents. We know no Fred Meyer is delivering that kind of sales revenue. Thus I must conclude that they did not sell these stores otherwise they would NOT be open in Seattle, Portland, etc.
Let me be crystal clear: the sites that supermarket chains have sold for lease backs are all rural, or in suburbs where there is still a lot of land. They sell because it's an easy cash out and they sell when there's an option to build a new store down the street or around the corner in case things go bad with the new landlord. Sometimes they intend to move or close and sell anyway.
As we have seen a tiny Safeway in San Francisco is closing and sold for over $30 million. To stay the rent is usually a 7-stack, so basically the purchase price divided by 7 is the new annual rent plus charges for CAM, tax etc. Do you think that little Safeway was going to survive if it had to pay $4.2 Million a year in rent? Of course not, they sold it and knew they were kissing it goodbye.
Fred Meyer went through some things back in the 90's. Could it be that they did real estate sales in the mid 90's and are working on 30-50 year leases that are at very low rates? I don't know anything specific, but I know broadly what babs is talking about when Fred Meyer went through some things back in the 90's and it was not great for them. I thought most of the properties were owned but maybe not. I've been meaning to dig up some old financial reports for Fred Meyer before they merged in Smiths (a real estate heavy company)/Ralphs (we know this has some very good real estate)/QFC (doubt that thing owned much real estate) but haven't.
Save Mart did sale-leasebacks on many stores in a variety of location types before they sold out to the current ownership group.
If they were low rent leases they'd also have low lease buyout fees. Could you imagine any of these stores NOT being forced to close? The cost to buy out the lease forcibly would just be a couple million, and then they could make hundreds of millions on big developments. I'm going to state again that if these core sites in the high dollar areas were leasebacks they would have all been forced to close years ago. AND someone would be bragging loud about owning that land too.
If they were going to do leasebacks they'd go do remote sites like Tillamook where if they got the boot later they could just go build another store a block over, across the street etc. That's how they're done.
A rep from this union says: “You can’t assume things will stay the same by opposing the merger, Cerberus intends to sell Albertsons stores to someone. If it’s not going to be Kroger, it’s going to be sold to someone else.”
Won’t Apollo be taking Albertsons off the hands of the three-headed dog assuming the merger is ground to a halt?
If Albertsons is selling stores, it will be their weak Denver, Texas, East Coast assets. Nothing in the West Coast, Intermountain, Southwest, Chicago regions is going away assuming the merger is stopped.
Another rep from this union said, “Workers in the sold-off stores would be better off under C&S than other potential buyers. We were pleased to find not only that they understood and liked the grocery business, but also recognized the importance of quality employees to their ongoing success.”
C&S is a wholesaler, not a retailer. At best, C&S will be a repeat of the Fleming Corporate Retail disaster (Fleming operated retail for maybe 10 years until they started offloading Rainbow, Baker’s, ABCO, etc. onto other buyers before collapsing inevitably). I still think C&S is just buying 413 stores to flip for real estate. That’s exactly what Comvest did with the Haggen trainwreck.
Ahold would ultimately be a better buyer for all of the divests. Give them the entire Albertsons nameplate, along with QFC, Carrs, Mariano’s, and some leftover Safeway, Vons, Tom Thumb, etc. stores.
This will likely be the sole union endorsing the merger.
This Union was bought off . Their words says it all.
What a corrupt betrayal. Their members should take them to court!
Right- like who is this rep, who said this? Did they just like, receive a statement to read from Albertsons?
However I am seeing a very carefully plotted legal case being designed here for Albertsons/Kroger to defend itself against FTC/all these states to try and force this merger through. Conflicting opinions within UFCW are not going to be helpful either. The larger, neighboring UFCW Local to UFCW 555 has already spoken out against the merger. I cannot believe a Pacific Northwest UFCW Local who was right there in front of the entire Haggen mess would come out in support for this.
As far as Albertsons/Kroger defending itself in a lawsuit, I think they may have a good chance of winning. Best case is this merger is canceled before it ends up going to court. Also all this distraction creates a great opening for competitors...
I am not sure how many union employees there are in Albertsons stores in southern Idaho or Wyoming. Both are "right to work" states and the only union signs I ever remember seeing were in the meat department(s) at the local near my university. It's not like Oregon or Washington where the entire lower-level staff are union contracted.
Don't the unions already have a lot of these protections for the worker in place?
Stay open for six months? What good is that even? Haggen had some stores that stayed open for more than six months...
Also in the event of a bankruptcy (like Haggen), what happens?
In the 1999 Albertsons/ASC merger the stores were supposed to be kept open for some number of years (5 or 10) but that was not followed and nobody seems to be proposing that idea again.
